RLPC-Slovenia's Mercator names advisers for debt restructuring

LONDON, Sept 17 (Reuters) - Slovenia’s largest retailer Mercator has appointed advisers to help with a 1 billion euro debt restructuring, according to finance industry and banking sources close to the negotiations.

The restructuring is a condition of a proposed sale of a 53.12 percent stake in Mercator to Croatian food and retail group Agrokor.

In June, Agrokor said it would pay pay 120 euros per share for the food retail group, valuing the company - Slovenia’s largest employer - at about 452 million euros.

Slovenia is trying sell state assets to boost its finances to try to avoid an international bailout. Mercator is not a part of the privatisation programme as it is held by private firms but the state does have stakes in some of them.

Agrokor has made several attempts over the last three years to acquire its Slovenian rival. A sale last year collapsed because Mercator’s management at that time refused to allow it to carry out due diligence.

It is not clear whether Agrokor will participate in the restructuring talks.

“It would make sense if Agrokor expressed an opinion over what form the restructuring should take,” said one source close to the talks. “One of the restructuring plans being considered does involve Agrokor.”

Financial advisory firm Houlihan Lokey is advising a coordinating committee of local and international banks on the restructuring, while local law firm Schoenherr is acting as legal adviser.

Investment bank Lazard and PricewaterhouseCoopers together with law firms Clifford Chance and Jadek&Pensa are advising Mercator, Mercator confirmed in a statement to Reuters.

There are more than 20 banks involved in Mercator’s 1.1 billion euros of debt, which includes a 137.6 million euro ($183.73 million) unsecured syndicated loan signed in September 2011 and a 130 million euro syndicated loan signed in March 2011, according to Thomson Reuters LPC.

In March 2011, the company also issued a debut unsecured, three-year, 58 million euro promissory note, known as a Schuldschein loan via Deutsche Bank. That loan has a bullet repayment, which means it is repaid at maturity in a lump sum.

Slovenian banks committed 45 million euros for the September loan, while foreign banks provided 92.6 million euros.

Erste Bank and Nova Ljubljanska Banka also arranged the 130 million euro March loan.

Under the sales plan with Agrokor, Mercator has until December to agree a restructuring with its banks, this can be extended to March 2014 if necessary, said the source close to the negotiations.

The deal between Agrokor and Mercator is also still subject to the relevant regulatory requirements, but according to the source, Mercator will have to restructure its debt whether the acquisition goes ahead or not.

The restructuring is also likely to be carried out under largely untested Slovenian restructuring law rather than a UK scheme of arrangement, popular in these situations because it only needs 75 per cent approval from creditors. But Mercator would not be able to prove sufficient links with the UK, according to the source. “I anticipate that being a Slovenian restructuring it could prove very challenging” said one banker with exposure to the company.

Agrokor was not immediately available to comment. ($1 = 0.7489 euros) (Additional reporting by Marja Novak and Zoran Radosavljevic. Editing by Jane Merriman)